New Brunswick finalizes carbon tax details with Ottawa for largest emitters

The New Brunswick and federal governments have sorted out details on when the province's largest fossil fuel emitters will switch from paying the federal carbon price to paying the provincial version.

The Higgs government's levy will apply to them retroactive to Jan. 1 of this year, handing them a big break in 2021 compared to their federal carbon tax bills for 2019 and 2020.

The New Brunswick system looks at each industrial facility and measures whether it's reducing its emissions intensity the amount of greenhouse gas produced per log, barrel of gasoline or roll of toilet paper, for example.

In 2021, the plants must reduce that emissions intensity by one per cent. If they fall short, they pay. If they surpass the target, they earn a credit.

The threshold will rise by one percentage point every year until it reaches 10 per cent in 2030, still far below the federal system's threshold of 20 per cent in effect now.

Environment and Climate Change Minister Gary Crossman said the provincial price is lower because it recognizes that New Brunswick's large industries depend on exports, and passing on a higher tax to customers would hurt their ability to compete in foreign markets.

"We are in a different situation in the province," he said. "It allows to be more flexible and move at our own rate."

The federal system applies in any province that refuses to implement its own price. The Higgs government first proposed its plan in June 2019, and it took federal officials until last September to approve it.

Under the new agreement that sets Jan. 1, 2021, as the date the provincial price took effect, polluters will pay Ottawa for their 2019 emissions this month. They'll pay the federal price for 2020 emissions in December, and they'll pay the province for 2021 emissions next year.

Ottawa approved the Higgs system last fall, despite federal environment minister Jonathan Wilkison describing it as "significantly weaker" than the national price.

"It will result in fewer emissions reductions," Wilkinson said at the time.

He added that he'll be looking for provinces to adopt a more stringent pricing standard when the national climate plan is up for review next year.

Even with a weaker industrial carbon price, New Brunswick should be able to reach its 2030 target for emissions reductions.

The goal is for emissions to be 30 per cent below 2005 levels. According to new federal data, they were already at 38 per cent below that level in 2019.